By Ducky Paredes | September 11, 2014

AFTER nearly a dozen Metro Rail Transit Line 3 (MRT3) mishaps and glitches since July alone–topped by the Aug. 13 overshoot by a malfunctioning train at the Taft Station that injured 38 passengers–senators saw it fit to pry into this EDSA rail system’s state of disorder.

The Senate inquiry was welcome news to MRT3’s over half-million daily commuters as it raised hopes that the series of public hearings would serve as catalyst for a combined executive-congressional action to reverse this rail system’s decrepit condition, and finally arrest the never-ending spate of accidents and other system hitches that have subjected train passengers to hellish conditions that placed them in harm’s way–on a daily basis.

Riding an MRT3 train has become so bad and dangerous that one meme that has gone viral on social media is last month’s MRT3 Rush Hour Challenge to government executives to brave the kilometric station queues and slowed-down rides, in a spinoff from the highly popular Ice Bucket Challenge in support of the fight against ALS (amyotrophic lateral sclerosis) or Lou Gehrig’s Disease.

If one were, at this point, still unbelievably looking for enough proof of the hopeless state of MRT3, then it has to be that just hours after the Senate’s Monday (Sept. 1) probe into the Aug. 13 accident that injured 38 passengers, this rail system encountered yet another glitch, this time a signaling system slip-up that stopped trips from the North Avenue-Shaw Boulevard stations for an hour.

As pointed out by MRT Holdings and MRTC executives: “The problems besieging the MRT-3 System, such as long queues, frequent train breakdown, among others, are attributed to the over-all deteriorating condition of the MRT-3 System due to poor maintenance of the said system by the current maintenance provider hired by DOTC.”

“The almost everyday news of train stoppages, breakdown of signaling system, breakdown of communication system, overshooting of trains from the rail tracks these past several months, clearly point to a breakdown in the maintenance of the system,” they add.

DOTC Secretary Joseph Abaya and the probe committee that was created to investigate the Aug. 13 incident dismissed the major accident as a mere case of “human error,” in trying to sweep under the rug the nagging issue of the system’s worsening upkeep.

The jury is still out on whether the drivers of the stalled train and the rescuing one were at fault, but what is certain is that human error was but a symptom of the true malady, which is the fast-deteriorating state of this EDSA rail system resulting from the monumental failure of the DOTC-handpicked service providers to (1) keep the trains in tip-top shape, (2) upgrade or replace antiquated hardware like signaling and emergency brake systems, and (3) procure needed equipment like tow trains to pull stalled coaches and water pumps to prevent flooding of the tracks during heavy rains.

However, what has bothered many of those who attended the maiden public hearing by the Senate committee on public services was the apparent drift of the proceedings to issues, although MRT3-related, not germane to this primary concern of Metro Manila’s train riders: the disaster-waiting-to-happen scenario resulting from the Department of Transportation and Communication (DOTC)’s virtual takeover of this 15-year-old rail system pockmarked by a disgusting level of upkeep or operation and maintenance (O&M) work.

In the absence during the initial inquiry of resource persons from DOTC’s supposed private partner–the MRT Holding Corp. (MRTH) and its subsidiary MRT Corp. (MRTC)–it was child’s play for DOTC and Light Rail Transit Authority (LRTA) executives to draw attention from the overriding issue–the poor maintenance of the train system under the Aquino administration–to the peripheral ones, particularly the (1) Equity Value Buyout (EVBO) or takeover plan of the Aquino

administration and the urgency for a capacity upgrade, (2) the arbitration case that the private partner filed against the government in 2008 for DOTC’s non-payment of rentals and other violations of their BLT agreement, and (3) the Temporary Protection Order (TPO) that the private partner sought in pursuit of the arbitration case it filed last summer in connection with the DOTC’s unilateral acquisition of 48 new trains from a Chinese supplier.

(MRTC is owned by MRT Holdings II Inc. (MRTH-II), which, in turn, is owned by MRT Holdings Inc. (MRTH).


It seems obvious that the EVBO is a dud and obviously just a diversionary ploy, considering that the P53.9-billion buyout budget that has been floated since last year by Abaya and Finance Secretary Cesar Purisima is not enough for a 100% takeover, as this will only cover payment of the economic rights held by state-run Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LandBank).

What about the cost of purchasing the stocks of private owners, specifically MRTH, MRTC and the Metro Pacific Investment Corp., which bought into MRTC in 2010?

MRTH vice president Frederick Parayno said in media reports that the representatives of the private partner that government officials have been talking to with regard to the EVBO plan are only the bond holders LandBank and DBP that own a combined 80% economic interest in MRT3, and not the private owners per se in the MRTH/MRTC/MPIC group.

He notes that that the amount that Government has earmarked for the takeover of the line represents only the amount for the acquisition of MRTC’s bonds.

“Back in 2009, when the arbitration case in Singapore started, the price of the line was already pegged at $2.5 billion (roughly P110 billion),” Parayno said. “This could have ballooned by this time.”

Parayno said that, “The government is not even discussing its proposal with the owners of MRTC. Who they are talking to are the government representatives, not the owners.”

In light of this situation, Parayno urged the government to set a meeting with the Sobrepeña Group to discuss this EVBO plan, adding that, “We are open to meeting with the government and to discuss the possible plans that they would want to pursue.


Although DOTC’s Abaya, Department of Finance (DOF)’s Purisima and National Treasurer Rosalia De Leon have been talking about EVBO since 2013, nobody from these agencies has as yet talked to MRTH and MRTC executives about this planned re-nationalization of the rail system., the premier website on railway technology and operations in the United Kingdom and across the world, says that, “reliability is the key to successful railway operation and maintenance should be the No. 1 priority to ensure reliability is on-going”

“If the equipment, especially the rolling stock, is not reliable, the railway is not workable. A good railway management will keep track of its performance and its failures and, by this means, ensure that problems are eliminated before they become endemic.”


As emphasized by MRTH spokesperson David Narvasa, EBVO is “not the immediate solution” to MRT3 passengers’ problems–and would, in fact be an “admission of default” by Government with respect to their BLT accord.

“An equity value buy out will not address the problem of safety,” Narvasa said in a statement. “The problem of safety can only be addressed by getting a qualified maintenance provider.”

“An equity value buyout is a right given to MRTC in case of default of the government. The government has to first be in default,” the lawyer-spokesperson stressed. “If DOTC says they insist on an equity value buyout, are they saying they are in default?” Narvasa says.

Are DOTC and its chosen contractors the reason for the Poor Operation and Maintenance (O&M) situation of the MRTC?

With nobody from the private owners around during the Sept. 1 hearing, the government’s transport executives had also cashed-in on the capacity expansion issue by turning it around and unduly blaming MRTC for the maintenance problem supposedly for failing to acquire new light rail vehicles (LRVs) to augment the current fleet from the time it started operating MRT3 in 1999.

What is true is that the private partner has made five proposals to purchase additional LRVs at no cost to the government since 2002 but all the proposals were rejected by the government.

The latest offer was made by MPIC in 2010 after buying into MRTC under a cooperation agreement with the Sobrepeña Group, which controls MRTH.

Such capacity expansion proposals were made five times by the private partner in keeping with the partnership principle of its 1999 BLT agreement with the government on almost doubling the system’s capacity from 350,000 passengers to at least 660,000 riders per day.

That is why MRTC offered to buy more LRVs since the early 2000s in view of (1) the projection then that the original maximum daily capacity of 350,000 would be met soon, and, (2) the two-year lead time for the manufacture and delivery of new coaches.


What DOTC eventually did was to dump Sumitomo Corp., the original maintenance provider when its twice-extended O&M contract expired in 2012. DOTC then hired in 2013 two contractors–the Philippine Trams Rail Management & Services Inc. (PH Trams)- Comm Builders & Technology Inc. (CB&T) consortium and, later, Au Porte Technologies (APT Global)–whose main qualifications seemed to be their owners’ close ties to Abaya, ex-DOTC Secretary Manuel Roxas II and fired

MRT general manager Al Vitangcol Jr. and/or their roles as political operatives or campaigners for Roxas and the Liberal Party (LP) in the 2010 elections.

DOTC had selected PH Trams and, later, APT Global without first consulting MRTC or submitting the contract’s Terms of Reference (TOF) for MRTC’s prior review and approval, in gross violation of their Build Lease Transfer (BLT) agreement forged in 1999.

Following the DOTC’s arbitrary award of the interim six-month maintenance contract to PH Trams on Oct. 16, 2012, MRTH II and MRTC wrote three consecutive letters to the Department (on Nov. 13, Dec, 18 and Jan. 17 the following year) noting that the selection of PH Trams did not conform to the earlier agreement that the government would seek prior consent from its private partner before choosing the O&M operator.

The MRTH/MRTC group had also questioned the qualification and capacity of PH Trams to maintain the MRT3.

Then on Aug. 22 last year, DOTC awarded a one-year maintenance contract to APT Global without again consulting MRTC anew or presenting MRTC with the accord’s TOR for its review and approval.

The unilateral moves by the DOTC to select interim O&M operators without first consulting MRTC (in violation of the BLT deal) prompted MRTC to repeatedly demand a technical audit of the MRT3 system–to ascertain not only the actual condition of the accident-prone rail system but also the competence of the interim upkeep contractors.

The DOTC/LRTA finally agreed to the MRTC-requested technical audit only after the Aug. 13 accident had injured 38 riders and stirred public uproar.

According to media reports, a team from Mass Transit Railway (MTR) of Hong Kong flew to Manila last month after being chosen to do the system-wide assessment–for the account of MRTC–and is set to complete its technical audit report in a month’s time.


Contrary to the DOTC/LRTA contention that the MRTC has been at fault for failing to acquire new LRVs, MRTH’s Narvasa revealed that MRTH/MRTC repeatedly proposed upgrades in anticipation of reaching the 350,000 design capacity of the MRT, but the DOTC ignored all the proposals.

“We gave government proposals for additional trains, including a proposal where the trains would be purchased at no cost to government but all these proposals were not acted upon by government,” Narvasa revealed.

Instead, he said, the government chose to acquire 48 LRVs from Dalian Locomotive.

“The problem with these trains from China is that they may not be compatible with the existing structure of MRT3,” added Narvasa. “What will be sent over is a prototype made by a company that has no experience in making double-articulated trains. What it has experience in are locomotives.”

“So the issue now will be whether these trains will be compatible,” he said. “We want to ensure, for the safety of the people, that the trains purchased are compatible with the current system.

The five proposals by the MRTH/MRTC/MPIC group are the following:

The Monumento Rail Transit Corp. proposed to provide additional trains, upgrade the system and extend the MRT-3 System to Monumento, as approved in 2002 by the National Economic and Development Authority (NEDA) Cabinet Committee;

MRTC proposal to DOTC in May 2004 to provide additional trains and upgrade the MRT-3 System pursuant to their BLT accord;

MRTC reiterated this proposal to the DOTC in September 2005;

MRTC sent another proposal to DOTC in March 2007 to provide additional trains and upgrade of the MRT-3 System; and

MPIC proposal in 2011 to provide additional trains, upgrade, and improve the system and extend the MRT-3 System to Monumento, at no cost to the Government.

The recent scandal concerning the $30-million extortion charge by Czech Ambassador Josef Rychtar and Inekon boss Josef Husek, which later on led to Vitangcol’s ouster, provides an inkling on why transport executives were opposed to the private partner’s repeated offers to acquire additional trains at no cost to the Philippine government.

It appears that DOTC executives would rather do the train acquisition themselves than let MRTH/MRTC/MPIC do it for monetary reasons, as could be gleaned from the Rychtar/Husek charge that Vitangcol and his gang had tried to extort $30 million from Inekon in exchange for the supply of new MRT3 trains.

Incidentally, Vitangcol’s gangmates–Marlo dela Cruz, Wilson Devera and Manolo Maralit–who had been fingered by Rychtar and Husek in the $30-million shakedown are the same guys running PH Trams and APT Global. But this is another story.


Industry watchers believe that the Senate probers should focus on the primordial issue of maintenance–or the lack of it–rather than being sidetracked by the peripheral issues that DOTC/LRTA officials have floated during the initial public hearing to conceal the (1) repeated BLT breaches at the expense of MRTC and (2) highly irregular selection of incompetent interim O&M contractors responsible for the train accidents and system glitches now happening with increasing frequency.

While conducting their probe, senator-investigators would do well to pry into other issues that impact on the safety of over a half-million daily train riders. These include:

Vitangcol’s allegation in a July news report that the DOTC contract awarded to lone bidder Dalian Locomotive was probably a done deal three years before the public bidding for the P4.5-billion capacity expansion project took place in 2013.

In a confidential letter reportedly sent to DOTC Assistant Secretary Jaime Fortunato Caringal, last June 16, Vitangcol revealed that a group of DOTC officials traveled to China in 2010 “to check on the manufacturing facilities of Dalian Locomotive, with all expenses paid by Dalian Locomotive.”

In this news report, Vitangcol said that during his meeting with Dalian Locomotive executives last May 9 at the MRT3 depot, Dalian’s local representative Antonio de Mesa claimed having taken two DOTC officials to the firm’s office in China.

The same news item identified these two officials as DOTC-MRT3 division chiefs Jose Ric Inotorio and Eleanor Naidas.

Vitangcol then asked: “Was it coincidence or intentional that Naidas and Inotorio were members of the Project Management Office, created to manage and administer the contract with Dalian, and ultimately to accept the LRVs, through a DOTC Special Order?”

The ousted MRT3 manager also claimed in his letter to Caringal that an unnamed member of the DOTC Technical Working Group that eventually disqualified the other bidder–China South Railways–and recommended the contract’s award to Dalian, was “also part of the group that visited Dalian Locomotive in China back in 2010.”

Some lawmakers want the DOTC to disqualify the PH Trams-CB&T venture and APT Global from the Oct. 13 bidding for MRT3’s O&M contract, given their poor maintenance record. Perhaps, considering everything one ought to ask that the DOTC be disqualified from having anything to do with the MRT and the LRT!


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